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The verdict in one of the real estate industry’s bombshell commission lawsuits has buyer’s agents asking questions, but none bigger than these: Who will pay them, and how much?
A new consumer survey undertaken by Inman in partnership with Dig Insights that surveyed 3,000 potential homebuyers offers potentially reassuring answers. Signaling the future appetite for buyer agency agreements, 95 percent of active home shoppers reported they would pay agents directly, or would be open to doing so under certain conditions.
Here’s more on that key finding:
- Asked whether they would directly pay a commission of 2 percent to 3 percent of a final sales price, 35 percent of active home shoppers said yes.
- That number was as high as 40 percent among repeat buyers, a group that is likely to have worked with a buyer’s agent before.
- While the percentage dipped slightly among renters or those living rent-free, it was still nearly 33 percent.
Most respondents chose a contingent answer, such as, “Yes, as long as I could finance it into my mortgage,” or the commission was negotiable. But with less than 5 percent unequivocally saying no, buyer’s agent value was evident with the consumers in the Inman-Dig survey.
That fact was reinforced elsewhere in the survey, which concluded with 20 randomized ‘agree/disagree’ statements.
- No sentiment garnered more agreement than, “The real estate agent I work with to buy my home will be fairly compensated.”
The takeaways on consumer sentiment on commissions are relevant given the recent verdict for the plaintiffs in the Sitzer | Burnett trial and the potential fallout from more to come.
It will be months — potentially years — before the undoing of long-held compensation norms, agent attrition, and the impact on homeownership is known. But if the Inman-Dig Insights consumer survey results are any indication, Americans pondering a home purchase are more concerned about interest rates than commission rates.
- When asked what factor is most critical when deciding to work with a real estate agent, 28 percent of respondents said experience. No other answer topped 20 percent, including commission. The commission dynamic was the least important, noted by just 8 percent of those surveyed.
- Survey takers were confident they knew how the compensation process worked, for both agents as well as several other parties or professionals in a home transaction. Almost 85 percent of respondents said they somewhat or completely understand how real estate agents are compensated.
- While slightly less confident about mortgage lender compensation, consumers clearly valued a quality loan originator. In the agree-or-disagree section, “The mortgage professional I work with to buy my home will be fairly compensated,” earned an interest score of 80. This finished second only behind the real estate agents’ score of 81.
How consumers report finding agents
In a nation with roughly 3 million real estate agents, it isn’t hard to find one. Based on findings from the Inman-Dig Insights consumer survey, though, evolving home shoppers’ attitudes and behaviors may be lessening the value of a personal referral.
The survey divided respondents into two cohorts: Those who were likely to buy a home in the next 12 months, and those who were not. From there, likely buyers were then asked whether they were already actively shopping.
- For those likely to buy and actively shopping, a referral from either a coworker, neighbor, or friend topped the list.
- Working with a family member was second, and a referral from family finished fourth.
- Third on the list, though? “I found them by searching online,” a method that showed up much more prominently for home shoppers who had yet to select an agent. This is critical, as that group comprised 55 percent of all likely buyers in the survey.
- Thirty percent of active buyers not working with a real estate agent yet said they’d turn to the internet to find one. That percentage jumped to nearly 35% among renters and those living at home, a group in which 6 out of 10 had yet to find a buyer’s agent.
More results and insights from the Inman-Dig Insights consumer survey will be made available to Inman Intel subscribers in the days and weeks to come.
About the Inman-Dig Insights Consumer Survey
The Inman-Dig Insights consumer survey was conducted from Oct. 27 to Oct. 29, 2023 to gauge the opinions and behaviors of Americans related to homebuying.
The survey sampled a diverse group of 3,000 American adults, ranging in age from 24 to 65. To ensure a balanced view, the participants were selected based on a set of criteria that included age, gender, regional distribution, and employment status, reflecting the broader U.S. population.
Statistical rigor was maintained throughout the study, with a margin of error of no greater than 1.8 percent for any one series of responses. This means the results should be largely representative of attitudes held by the broader U.S. population. Both Inman and Dig Insights are majority-owned by Toronto-based Beringer Capital.